Rohit was a passionate entrepreneur. He had poured everything into his business—time, energy and all his savings. His company was his dream, his identity. But like many entrepreneurs, he overlooked one critical element; personal financial security.
One day, an unexpected crash hit his industry. Orders dried up, payments delayed, and cash flow tightened. Rohit suddenly realized he had no emergency buffer to rely upon. His entire wealth was tied up in the business. The stress was immense—not just about keeping the business alive but about paying household bills, kid’s school fees, and even medical expenses.
Now contrast this with Meera, another entrepreneur. She too faced tough times when her business went through a downturn, but her approach was different. She had built a personal emergency fund—enough to cover 12 months of household expenses. This cushion gave her breathing space. She could make strategic decisions for the business without panicking.
Entrepreneurs must remember that personal security is as important as business growth. Set aside at least 9–12 months of living expenses in liquid assets like savings accounts, short-term debt funds, or fixed deposits. This ensures your family isn’t shaken every time the business faces a rough patch.
Many entrepreneurs fall into the trap of reinvesting everything into their business. While confidence in your venture is admirable, it’s risky to have all your eggs in one basket. Meera followed a 70:30 rule: 70% of her surplus went into business reinvestment, but 30% went into personal wealth creation—mutual funds, retirement accounts, and children’s education planning. This balance ensured that even if the business faltered, her family’s future remained secure.
One evening, Rohit confided in me, “I thought I was invincible, but what if something happens to me?” This is where a term insurance plan becomes non-negotiable. For entrepreneurs, the line between personal and business risks is thin. A well-structured term plan ensures that your family’s financial goals—like paying off debts, children’s education, or maintaining lifestyle— remain intact, even in your absence. The thump rule we recommend for entrepreneurs is that they should have a life insurance coverage of at least 15 time of their annual income.
Ultimately, both Rohit and Meera shared the same dream: to achieve financial freedom, where work becomes a choice, not a compulsion. The difference? Meera built her financial freedom strategy alongside her business strategy. She set long-term goals, invested regularly, insured adequately, and separated personal wealth from business risks. Today, she enjoys the dual satisfaction of running a thriving business and knowing her family’s financial future is secure. Rohit, meanwhile, is still catching up—learning the hard way that financial planning is not optional, even for entrepreneurs.
Entrepreneurs, your business is your dream—but don’t let it consume your entire financial future.
• Build an emergency fund.
• Balance business investments with personal wealth creation.
• Protect your family with a solid term plan.
• Work steadily toward financial freedom.
It is about securing your life and legacy.
{The author, Sibin Paul MBA, CFP, is the Founder & CEO of “Wealth Matrix” & an Ex. Banker, and can be contacted at www.wealthmatrix.in, 99944 60022}
